New York Fed met with Wall Street firms about key lending facility: FT

New York Federal Reserve President John Williams met with Wall Street investors last week about a major lending opportunity, the Financial Times said. reportedQuoting three people familiar with the matter.

The meeting, which took place on the sidelines of the Fed’s annual Treasury market conference on Wednesday, was attended by representatives of most of the primary dealers of the 25 banks that underwrite the government’s debt, according to the report. The report stated that the meeting participants were members of banks’ teams specialized in fixed income markets.

CNBC confirmed that the meeting took place.

Williams sought feedback from those brokers on the Fed’s use of its perpetual repo facility, a permanent lending instrument that allows eligible financial institutions to borrow cash from the central bank in exchange for high-quality collateral such as Treasury bills. The tool would allow institutions to sell securities to the Fed with a subsequent repurchase agreement, essentially acting as a support for markets.

“Chairman Williams convened the primary trading parties of the New York Fed [primary dealers] A spokesperson for the New York Fed told the Financial Times, which reported the news on Friday, “to continue to engage with the goal of using the perpetual repo facility as a tool for monetary policy implementation and to obtain feedback that will ensure it remains effective for rate control.”

The meeting comes amid growing concerns about stress in parts of the U.S. financial system and signs that market liquidity is tightening.

Roberto Perli, who manages the Fed System Open Market Account, which includes the central bank’s bond and cash holdings, said Wednesday that firms that need the central bank’s permanent repo facility “should be used when it makes economic sense.”

The New York Fed did not immediately respond to CNBC’s request for comment.

Read the full Financial Times report Here.